17-03 Version of 16.9 Non-Home Property Exclusions

Non-home property is any countable asset other than a homesteadA place of abode and the lands used or operated in connection with it. Homestead property may have more than one building or house on it.. See Section 17.4 Exceptions for divestment. Exclusions of non-home property in EBD cases include:

Real property that is listed for sale with a realtor at a price consistent with its fair market value .
Property excluded regardless of value or rate of return. Property used in a trade or business is in this category (see Section 15.6.3.1 Business Assets). The property may be excluded as used in a trade or business when the applicantA person who has submitted a request for coverage for whom no decision has been made regarding eligibility/member is actively involved in the business operation on a day to day basis. The information reported on the Schedule E, Supplemental Income and Loss, should be checked to determine whether the individual is actively engaged in the business. If the income is listed as Non-Passive Income, the individual is actively engaged in the business.

When determining if a trade or business exists in an LLC or other questionable situations workers should consider:
1. Does the IRSInternal Revenue Service regard this as a trade or business?
2. Does the individual have documents to support the claim of trade or business such as licenses, permits, registration, etc.?
3. Is the individual a member of a business or trade association?

Property excluded up to $6,000, regardless of rate of return. This category includes non-business property used to produce goods or services essential to self-support. Any portion of the property's equity value in excess of $6,000 is not excluded.

Non-business property essential to self-support can be real or personal property. It produces goods or services essential to self-support when it is used, for example, to grow produce or livestock solely for personal consumption, or to perform activities essential to the production of food solely for home consumption.

Example 1:

John owns two acres of land that he uses to grow fruits and vegetables for his personal consumption. Up to $6,000 of the equity value of the property would be exempt.

Property excluded up to $6,000 if it is nonbusiness property that produces a net annual income (either cash or in-kind income) of at least 6 percent.

Nonbusiness income producing property is land or non-liquid property which provides rental or other income but is not used as a part of a trade or business. Nonbusiness income producing property includes, but is not limited to, the following:

Structures producing rental income
Land producing rent or other land use fees (non-liquid notes or mortgages, royalties for timber rights, mineral exploration, etc.)

Example 2:

James is applying for EBD Medicaid. He lives in a CBRFcommunity-based residential facility. A place in which five or more unrelated adults live and where they receive care, treatment, or services, but not nursing care on any permanent basis, in addition to board and room and is renting out his home which has an equity value of $20,000. He does not intend to return to the home. The income from the rent exceeds 6 percent of the equity value of the home, so $6,000.00 of the equity value is exempt. The remaining $14,000.00 is a counted asset.

Example 3:

Joan is applying for EBD Medicaid. She lives in her home but also owns a lake cottage in northern Wisconsin. She rents the cottage during the summer months. The income from the rent does not equal 6 percent of the equity value of the cottage. The entire equity value of the cottage is a countable asset.

If the excluded portion produces less than a six percent return due to circumstances beyond the person's control (e.g., crop failure, illness), and there is reasonable expectation that it will again produce at least a six percent return, continue to consider the first $6,000 in equity as excluded.

Note:

Rental property cannot be exempt as a business property unless the property owner is in the business of renting and managing properties. If a person simply owns a piece of property and is renting it, he or she is not considered to be the owner of a trade or business (see 2. above for more information).

This page last updated in Release Number: 17-03
Release Date: 11/03/2017
Effective Date: 11/03/2017